Multiple Choice
Which of the following is an example of a built-in stabilizer in the economy?
64
views
1. Introduction to Macroeconomics
Introduction to Economics
Multiple Choice
Which of the following would most likely increase aggregate supply in an economy?
A
A technological advancement that improves production efficiency
B
A decrease in the labor force participation rate
C
An increase in the minimum wage
D
A rise in corporate taxes
Verified step by step guidance1
Step 1: Understand that aggregate supply (AS) represents the total quantity of goods and services that producers in an economy are willing and able to supply at different price levels.
Step 2: Recognize that factors which increase production efficiency or reduce production costs tend to shift the aggregate supply curve to the right, indicating an increase in aggregate supply.
Step 3: Analyze each option: a technological advancement that improves production efficiency reduces costs and increases output, thus increasing aggregate supply.
Step 4: Note that a decrease in labor force participation reduces the available labor, which would likely decrease aggregate supply, shifting it left.
Step 5: Understand that increases in minimum wage or corporate taxes raise production costs, which typically decrease aggregate supply by shifting the curve to the left.
Related Videos
Related Practice
